US-based outsourcing firm iGate's former chief executive Phaneesh Murthywill no longer receive unvested stock options worth $7 million due to him between November this year and 2020 after he was terminated in May for not reporting a relationship with a subordinate.
According to a report in The Times of India, "Murthy was eligible for stock options in multiple tranches - 3,60,600 and 22,766, both exercisable before November 11 with an option exercise price of $0.8 and $0.01 respectively; 1,00,000 options at an option price of $6.12 each exercisable before October 16, 2018; and 30,413 options at $9.80 apiece to be exercised before March 20, 2020".
The company's rules say that an employee will not receive unvested shares if he or she leaves prior to the vesting date.
iGate had asked Murthy to quit as he did not disclose his relationship with the subordinate in time.
As per iGate's policy, where a romantic or sexual relationship exists, the person in the position of greater authority must notify her or his supervisor, head of the human resources department, or the board of directors. In such a case, the higher authority in the company can ensure that alternative supervisory or evaluative arrangements are put in place, according to the company.
The sacked CEO of iGate has also lost $15 million in severance benefitas he was dismissed from service for professional misconduct.
Murthy was eligible to receive a lump sum payment of $10 million as severance compensation, according to an SEC filing. Add to this thestocks that he has not vested which are valued at around $7 million. So, in total, he would have received about $17 million. But since Murthy had sold off shares worth about $2 million, his total compensation amounted to $15 million.
Basically, since Murthy was terminated for a violation of iGate's policy, he is not entitled to severance under the terms of his employment agreement.
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Updated Date: Dec 20, 2014 23:41:54 IST